no buyer agent: how does it work? (real estate, insurance)

[behtypa]

My family is buying a pre-exisiting home, all cash no loans. We are planning to use a Seller's Agent to save on Buyers commissions.

How does this work? What portion of Buyers commissions is normally offered to a Sellers agent? 50/50 split (2.5% / 2 = 1.25% to an Agent and us). Would a smaller commission split (say, 70/30) work?

When Buyers commission is split between the Sellers agent and us (say, 2.5% / 2 = 1.25% each), what can be done to secure the half-commission payment (refund, whatever you call it) by the Sellers Agent to us?
Do we have to sign an agreement with the Agent, saying that "we recruit you only for this property, for 15 days, and when closed you pay us back 1.25% commission"? Is this how it works?

What other things we would need to consider? Please share your experience if you had similar.

[RCH99]

If these are serious questions......I would highly recommend that you find a realtor to assist "you" with this purchase. It's important to understand how to proceed through a real estate transaction, otherwise you may end up realizing trying have a nominal amount of realtor commission "rebated" to you should have been the very last thing you should have worried about. Cash or not.

[chris_ut]

Not a good idea. If the home seller already is listed with an agent then he has contracted to pay the agent a set amount already (normally 6%). If you use a buyer's agent then your agent and the sellers agent each get 3%. If you use no agent then the sellers agent keeps the whole 6%. The seller's agent is a legal representative of the seller and is not required to nor has an interest in helping you out or getting you a good deal. Get yourself a good buyer's agent. You have a lot to gain and little to lose. You do not need to sign any agreements with an agent unless you want to. If you already have a home picked and the buyer's agent is just doing paperwork you can ask for a rebate of some of the commission.

[behtypa]

Originally Posted by chris_ut

Not a good idea. If the home seller already is listed with an agent then he has contracted to pay the agent a set amount already (normally 6%). If you use a buyer's agent then your agent and the sellers agent each get 3%. If you use no agent then the sellers agent keeps the whole 6%. The seller's agent is a legal representative of the seller and is not required to nor has an interest in helping you out or getting you a good deal. Get yourself a good buyer's agent. You have a lot to gain and little to lose. You do not need to sign any agreements with an agent unless you want to. If you already have a home picked and the buyer's agent is just doing paperwork you can ask for a rebate of some of the commission.

I was probably misunderstood. The normal "tango dancers" are:

Seller - Sellers Agent (3%) vs Buyer - Buyers Agent (3%) = 6% commissions

I have a home picked out. I don't see a reason to pay to a Buyers Agent if all paperwork can be done by a Sellers Agent. Yes, I will use an agent, a Sellers Agent, for this matter.

If the Sellers Agent is doing all the job, why not to make a deal with him/her to split the other 3%??

Please give a me a good reason not to do so.

[Malvie]

Originally Posted by behtypa

I was probably misunderstood. The normal "tango dancers" are:

Seller - Sellers Agent (3%) vs Buyer - Buyers Agent (3%) = 6% commissions

I have a home picked out. I don't see a reason to pay to a Buyers Agent if all paperwork can be done by a Sellers Agent. Yes, I will use an agent, a Sellers Agent, for this matter.

If the Sellers Agent is doing all the job, why not to make a deal with him/her to split the other 3%??

Please give a me a good reason not to do so.

Um, yeah, good luck with that. Unless you are a licensed Texas Realtor, they aren't going to do it.

It's like this: I want a new Honda Pilot. I know they are selling for $35,000 (list price $40,000), but I only want to pay $25,000. So I'll just tell them that and they'll take it.

[Poltracker]

Originally Posted by behtypa

I was probably misunderstood. The normal "tango dancers" are:

Seller - Sellers Agent (3%) vs Buyer - Buyers Agent (3%) = 6% commissions

I have a home picked out. I don't see a reason to pay to a Buyers Agent if all paperwork can be done by a Sellers Agent. Yes, I will use an agent, a Sellers Agent, for this matter.

If the Sellers Agent is doing all the job, why not to make a deal with him/her to split the other 3%??

Please give a me a good reason not to do so.

Doesn't generally work that way...see Chris' post for an explaination. You would be alot better off with your own representative, especially if you are not familiar with what needs to be done. Don't forget the little things like surveys, inspections, title insurance, and those wonderful little contingeny clauses in a contract that you absolutely need but the seller (and their agent) will not include if you let them write the contract.

[Mommy/Artist/Lawyer]

Originally Posted by chris_ut

Not a good idea. If the home seller already is listed with an agent then he has contracted to pay the agent a set amount already (normally 6%). If you use a buyer's agent then your agent and the sellers agent each get 3%. If you use no agent then the sellers agent keeps the whole 6%. The seller's agent is a legal representative of the seller and is not required to nor has an interest in helping you out or getting you a good deal. Get yourself a good buyer's agent. You have a lot to gain and little to lose. You do not need to sign any agreements with an agent unless you want to. If you already have a home picked and the buyer's agent is just doing paperwork you can ask for a rebate of some of the commission.

Lets be honest though, a buyer's agent doesn't have much incentive to help a buyer get a deal on a house. The more a house sells for the higher the the commission is for both agents. So ultimately it is in both agents interest to get you to pay more for the house. In my opinion a buyers agent is a good idea if you haven't found a house yet or if you have never bought a house before. It makes it much easier to look at multiple houses if you have a buyer's agent and the first time around it helps to have someone point out standard practices and the items you should expect the seller to foot the bill for. (Practices like how much to pay for an option period and how long it should last). If you have already found a house and you are a sophisticated buyer then a buyers agent is kind of redundant. The benefit as the OP pointed out of not having a buyers agent is that you can potentially negotiate a lower price. The commission is between the seller and the seller's agent, but if there are not a bunch of other buyers waiting in line and the agent wants to make an immediate commission they might be willing to settle for 3 percent of a bird in hand rather than hold out for a possible 6 percent of a bird in a bush. Make an offer less the 3 percent commission and mention to the seller in writing why you have done so. The rest is up to the seller and his agent. The agent will either agree to help the seller out by lowering the commission or they won't. Also the paperwork is all boiler plate and the seller's agent should be willing to provide you with the necessary documents. Just use the documents from any previous home purchase as a guideline. I bought my last house without an agent and it worked out perfectly.

[dcoolbro]

If the seller agent is doing work for the buyer and seller, why would he/she give up that commission for you? It most likely is not going to happen. If you did the paperwork yourself, then you may be able to pressure the seller to have the agent reduce the commission in order to get a better deal. But you're not doing that it seems. I thought about not getting a buyer agent too, but I had concerns about getting screwed from the seller.

[alaskaneric]

The commission is normally paid by the seller, not the buyer. Make your offer no matter what the seller has to pay. If the seller declines your offer and counters at, say 1.5% above your price, and you can't pony up this difference, then counter with another offer at his latest asking price contingent on commission being reduced to 4.5%. You can always try. It is rarely accepted as far as I've seen but for very expensive properties.

[behtypa]

Originally Posted by Poltracker

Don't forget the little things like surveys, inspections, title insurance, and those wonderful little contingeny clauses in a contract that you absolutely need but the seller (and their agent) will not include if you let them write the contract.

My math tells me this:

Half the Buyers Agent commission (1.5%) off 200K home is $3000. Using him/her or not, I still have to pay for all these things you have mentioned on top of the commission, right? If so, why not to do it yourself? I don't mind setting up an appointment with an inspector myself. it's not a rocket science.

Or is there something I don't know and "surveys, inspections, title insurance" are included in the Agents fees?

"and those wonderful little contingeny clauses in a contract" - a RE attorney can be hired for this matter for $300-400, I guess.